If the U.S. dollar depreciates against the yen below the targeted exchange rate, the U.S. Federal Reserve must intervene in the foreign exchange market so that

Question

Quizplus · Accepted Answer

If the U.S. dollar depreciates against the yen below the targeted exchange rate, the U.S. Federal Reserve must intervene in the foreign exchange market by selling U.S. dollars and buying yen. This will reduce the supply of U.S. dollars and increase the supply of yen, which will cause the U.S. dollar to appreciate against the yen.

If the US Dollar Depreciates Against the Yen Below the Targeted Exchange